‘People don't need prayers (...), they need someone to do the tasks at hand.’ The British author Terry Pratchett's thought could be the motto of workforce management. Two essentials are needed to run a business: staff and everyone doing their job. But what happens when there are not enough people, some do not have the right skills and you can't even hire new ones? What determines whether a company expands, downsizes, or stagnates? And what can be done in the event of a staff freeze? This is the topic we've explored in this article!

Of all the resources available to a company, human capital is the only one that can regulate itself, its actions, and therefore its performance. It is characterised by an interesting duality: on the one hand, it represents a significant cost, just think of wages and office maintenance, but on the other hand, it is essential for generating revenue. It is in a company's interest to reduce costs as much as possible, but without human resources, operations and profitability are compromised. 

The aim of human resource management, or workforce management, is to provide the right number of motivated staff with the right skills and knowledge at the lowest possible cost.

30% growth planned for this year

As part of the Randstad HR Trends 2024 survey, 353 senior managers of domestic companies were interviewed on topics such as the business environment, challenges, working from home and artificial intelligence.

78% of the executives identified managing increased salary costs as one of the biggest challenges for 2024. Perhaps this could be the main reason why 7% of companies plan to reduce their workforce this year, 46% do not plan to make any changes and only 30% plan to hire new staff. In 2023, 34% of respondents still planned to expand, and 89% in 2022. The latest data also shows that 17% of firms surveyed do not want to change their workforce this year, and those leaving will not be replaced for a temporary period.

But what determines whether a company wants to expand, shed workers, or announce a staff freeze? Let's find out what can influence workforce management!

Workforce management: what factors influence staff turnover?

Labour management is determined by external and internal factors. External factors include social and demographic trends (such as an ageing society), labour market conditions (such as structural unemployment or job hopping), political and legal regulation (such as changes in employment patterns), economic trends (such as high inflation, falling purchasing power), globalisation and technological trends (such as the rise of artificial intelligence, the internationalisation of the labour market).

There are also internal factors that influence whether a firm plans to expand, contract or stagnate. Company characteristics, job characteristics and the composition of the existing team all influence what action is needed.

Why are companies cautious about expanding their workforce?

As the Randstad statistics show, companies are quite cautious when it comes to expansion. In most cases, this is due to uncertainty. Recent high inflation, wars and economic difficulties have made companies cautious. Most try to wait before hiring. 

Hiring a new employee can be costly and, in some cases, (e.g. for managerial and specialist positions) very lengthy. However, if the product or service is not selling in the market, the time and energy invested in finding a new employee may have been wasted.

There are professions (e.g. software developer, information security specialist, mechanical engineer) and positions (e.g. senior manager, key specialist) where it is particularly difficult to find highly qualified, reliable staff. In such cases, the amount of money spent on headhunting and recruitment increases as time goes on, but the company is unable to make progress towards its objectives or only makes very small steps towards them.

A staff freeze is a vicious circle for the company. But what does it mean when it happens and how can you get through this period?

A staff freeze: balancing on the edge

The essence of a staff freeze is that no new people can be hired, even for vacant positions, at the discretion of management. We have seen several examples of this in the public sector, but it is not uncommon in the market.

In most cases, the move is motivated by change or economic hardship. Sometimes a company may find itself in a difficult financial situation and therefore unable to take on new staff, but in many cases restructuring, restructuring or acquisitions are the reason for the stop. It is understandable not to take on new people for a few months before a reorganisation, it is much more expedient to embed new staff in the new structure.

In most cases, therefore, a staff freeze is temporary and can cause significant difficulties for the company. In such cases, the sudden loss of one person can cause serious problems. A forced move can upset the whole operation of a company. Without the right capacity and knowledge, operational efficiency can be reduced, quality can decline and, if something goes wrong, the company can end up in a worse position than before the freeze.

It can place a huge burden on staff and business alike. Progress can be jeopardised, contracts can be delayed, tenders can be cancelled, the supply chain can be hampered. These add to stress, overload and inaccuracy, which can lead to more people leaving.

Suppose, for example, that a company announces an indefinite staff freeze. But the purchasing manager leaves the company in search of a better job. In such a situation, no new Purchasing Manager is hired, leaving the managerial position vacant. There may be one person who can be promoted, but it is important to see that the staff shortage is not eliminated by this move, but only moved to another level. 

An example could be a growing company where a new department is added. They cannot hire a new person to head this department because of the staffing freeze, but someone has to take over the job. As with the previous example, you can play chess with the internal people, but it may not be the most effective.

To avoid a downward spiral, it is worth looking for other solutions, such as bringing in an interim manager.

What to do in the event of a staff freeze - the interim manager as a solution

One of the tools of workforce management is interim management, whereby a manager reinforces the team for a specific project or until a set target is met. It does not increase staff numbers as it is not employed, which is why it is an excellent solution in the event of a staffing freeze.

The interim manager is an external expert who takes on the management and leadership tasks so that the work does not get bogged down and can even be given a fresh impetus thanks to the new approach.

As an interim service provider, Interim Ltd. works with the most experienced and professional managers. We provide a comprehensive management service that is preferred by companies from all segments of the business world. We care about our clients and take their success to heart - We create value where and when it matters!